Fulton Financial Corporation Announces Third Quarter 2024 Results

LANCASTER, Pa., Oct. 15, 2024 /PRNewswire/ -- Fulton Financial Corporation (NASDAQ:FULT) ("Fulton" or the "Corporation") reported net income available to common shareholders of $60.6 million, or $0.33 per diluted share, for the third quarter of 2024, a decrease of $31.8 million, or $0.19 per share, in comparison to the second quarter of 2024. Operating net income available to common shareholders for the three months ended September 30, 2024 was $91.3 million, or $0.50 per diluted share(1), an increase of $8.8 million, or $0.03 per share, in comparison to the second quarter of 2024.

"We are excited about the progress we made on key strategic initiatives and pleased to see that this work has generated record operating earnings this quarter," said Curtis J. Myers, Chairman and CEO of Fulton. "We continue to see strong operating revenue growth, improvement in operating efficiency and profitability, combined with solid organic capital generation."

Financial Highlights

Third quarter of 2024 operating results of $0.50 per diluted share represented an all-time high for Fulton and was impacted by the following items:

Solid net interest margin of 3.49%, an increase of six basis points compared to the prior quarter.

Excluding brokered deposits, customer deposits increased $745.0 million compared to the prior quarter.

Common equity tier 1 capital increased to 10.5%, compared to 10.3% in the prior quarter.

Tangible shareholders' equity per common share increased $0.59, or 4.7%, to $13.02 compared to the prior quarter.

Acquisition-related(2) expenses of $14.2 million.

FultonFirst implementation and asset disposal costs of $9.4 million.

The following items highlight notable changes in the components of net income in the third quarter of 2024 compared to the second quarter of 2024:

Net interest income totaled $258.0 million, an increase of $16.3 million, which was largely due to the full-quarter impact of the Acquisition and an increase in on-balance sheet liquidity.

Non-interest income before investment securities gains (losses) was $59.7 million compared to $113.3 million in the second quarter of 2024. The decrease was primarily due to a $55.1 million change in the gain on acquisition (net of tax) with a $7.7 million reduction recorded in the third quarter of 2024.

Non-interest expense was $226.1 million compared to $219.8 million in the second quarter of 2024, excluding the $20.3 million gain on the sale-leaseback transaction, reflected in other expense in the second quarter of 2024. The increase was largely due to an $8.2 million increase in salaries and benefits expense driven by a $4.9 million increase in employee severance costs related to the FultonFirst initiative, a full-quarter impact of salaries and benefits from the Acquisition resulting in an increase of $2.7 million and a $1.7 million increase in incentive compensation expense. The increase in salaries and benefits expense was partially offset by a $1.4 million decrease in consulting costs related to the FultonFirst initiative.

Balance Sheet Summary

Net loans totaled $24.2 billion, an increase of $69.8 million compared to $24.1 billion as of June 30, 2024. The increase was largely due to increases of $203.7 million and $53.8 million in commercial mortgage loans and residential mortgage loans, respectively, partially offset by decreases of $130.8 million, $53.1 million and $40.4 million in construction loans, commercial and industrial loans and consumer loans, respectively. Excluding the impact from the day 1 Purchased Credit Deteriorated ("PCD") adjustment of $55.9 million and purchase accounting accretion of $24.9 million, net loans acquired in the Acquisition declined approximately $82.3 million since the Acquisition Date. Excluding purchase accounting accretion of $14.5 million, net loans acquired in the Acquisition declined approximately $49.2 million to $2.5 billion, compared to the second quarter of 2024.

Deposits totaled $26.2 billion, an increase of $592.5 million compared to $25.6 billion as of June 30, 2024. The increase was primarily due to increases of $374.2 million, $301.4 million and $177.1 million in time deposits, interest-bearing demand deposits and savings deposits, respectively, partially offset by decreases of $152.5 million in brokered deposits and $107.7 million in noninterest-bearing demand deposits. Deposits assumed in the Acquisition declined approximately $248.6 million since the Acquisition Date and increased approximately $108.7 million to $3.9 billion compared to the second quarter of 2024.

Provision for Credit Losses and Asset Quality

The provision for credit losses was $11.9 million in the third quarter of 2024 compared to $32.1 million in the second quarter of 2024. The decrease was primarily related to the Acquisition, which included a provision for credit losses of $23.4 million for non-PCD loans in the second quarter of 2024.

Non-performing assets were $205.0 million, or 0.64% of total assets, at September 30, 2024, in comparison to $174.0 million, or 0.55% of total assets, at June 30, 2024.

Net charge-offs for the third quarter of 2024 were 0.18% of total average loans in comparison to 0.19% in the second quarter of 2024.

The allowance for credit losses attributable to net loans remained relatively unchanged and totaled $376.0 million, or 1.56% of total loans at September 30, 2024, compared to $375.9 million, or 1.56% of total loans at June 30, 2024.

Additional information on Fulton is available on the Internet at www.fultonbank.com.

(1)

Financial measure derived by methods other than generally accepted accounting principles ("GAAP"). Refer to the calculation on the page titled "Reconciliation of Non-GAAP Measures" at the end of the press release.

(2)

On April 26, 2024, the Corporation announced that its wholly owned banking subsidiary, Fulton Bank, National Association ("Fulton Bank"), acquired substantially all of the assets and assumed substantially all of the deposits and certain liabilities of Republic First Bank, doing business as Republic Bank ("Republic Bank"), from the Federal Deposit Insurance Corporation (the "FDIC"), as receiver for Republic Bank (the "Acquisition"), pursuant to the terms of the Purchase and Assumption Agreement - Whole Bank, All Deposits, effective as of April 26, 2024 (the "Acquisition Date"), among the FDIC, as receiver of Republic Bank, the FDIC and Fulton Bank.

Safe Harbor Statement

This press release may contain forward-looking statements with respect to the Corporation's financial condition, results of operations and business. Do not unduly rely on forward-looking statements. Forward-looking statements can be identified by the use of words such as "may," "should," "will," "could," "estimates," "predicts," "potential," "continue," "anticipates," "believes," "plans," "expects," "future," "intends," "projects," the negative of these terms and other comparable terminology. These forward-looking statements may include projections of, or guidance on, the Corporation's future financial performance, expected levels of future expenses, including future credit losses, anticipated growth strategies, descriptions of new business initiatives and anticipated trends in the Corporation's business or financial results.

Forward-looking statements are neither historical facts, nor assurance of future performance. Instead, the statements are based on current beliefs, expectations and assumptions regarding the future of the Corporation's business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of the Corporation's control, and actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not unduly rely on any of these forward-looking statements. Any forward-looking statement is based only on information currently available and speaks only as of the date when made. The Corporation undertakes no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

A discussion of certain risks and uncertainties affecting the Corporation, and some of the factors that could cause the Corporation's actual results to differ materially from those described in the forward-looking statements, can be found in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2023, Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024 and June 30, 2024 and other current and periodic reports, which have been, or will be, filed with the Securities and Exchange Commission (the "SEC") and are, or will be, available in the Investor Relations section of the Corporation's website (www.fultonbank.com) and on the SEC's website (www.sec.gov).

Non-GAAP Financial Measures

The Corporation uses certain financial measures in this press release that have been derived from methods other than GAAP. These non-GAAP financial measures are reconciled to the most comparable GAAP measures in tables at the end of this press release.

FULTON FINANCIAL CORPORATION

SUMMARY CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)

(dollars in thousands, except per share and shares data)

Three months ended

Sep 30

Jun 30

Mar 31

Dec  31

Sep 30

2024

2024

2024

2023

2023

Ending Balances

Investment securities

$   4,545,278

$    4,184,027

$   3,783,392

$   3,666,274

$   3,698,601

Net loans

24,176,075

24,106,297

21,444,483

21,351,094

21,177,508

Total assets

32,185,726

31,769,813

27,642,957

27,571,915

27,375,177

Deposits

26,152,144

25,559,654

21,741,950

21,537,623

21,421,589

Shareholders' equity

3,203,943

3,101,609

2,757,679

2,760,139

2,566,693

Average Balances

Investment securities

4,237,805

4,043,136

3,672,844

3,665,261

3,834,824

Net loans

24,147,801

23,345,914

21,370,033

21,255,779

21,121,277

Total assets

31,895,235

30,774,891

27,427,626

27,397,671

27,377,836

Deposits

25,778,259

24,642,954

21,378,754

21,476,548

21,357,295

Shareholders' equity

3,160,322

2,952,671

2,766,945

2,618,024

2,645,977

Income Statement

Net interest income

258,009

241,720

206,937

212,006

213,842

Provision for credit losses

11,929

32,056

10,925

9,808

9,937

Non-interest income

59,673

92,994

57,140

59,378

55,961

Non-interest expense

226,089

199,488

177,600

180,552

171,020

Income before taxes

79,664

103,170

75,552

81,024

88,846

Net income available to common shareholders

60,644

92,413

59,379

61,701

69,535

Per Share

Net income available to common shareholders (basic)

$0.33

$0.53

$0.36

$0.38

$0.42

Net income available to common shareholders (diluted)

$0.33

$0.52

$0.36

$0.37

$0.42

Operating net income available to common shareholders(1)

$0.50

$0.47

$0.40

$0.42

$0.43

Cash dividends

$0.17

$0.17

$0.17

$0.17

$0.16

Common shareholders' equity

$16.55

$16.00

$15.82

$15.67

$14.47

Common shareholders' equity (tangible)(1)

$13.02

$12.43

$12.37

$12.25

$11.05

Weighted average shares (basic)

181,905

175,305

162,706

163,975

164,566

Weighted average shares (diluted)

183,609

176,934

164,520

165,650

166,023

(1) Non-GAAP financial measure. Refer to the calculation on the page titled "Reconciliation of Non-GAAP Measures" at the end of this press release.

Three months ended

Sep 30

Jun 30

Mar 31

Dec  31

Sep 30

2024

2024

2024

2023

2023

Asset Quality

Net charge-offs to average loans

0.18 %

0.19 %

0.16 %

0.15 %

0.10 %

Non-performing loans to total net loans

0.84 %

0.72 %

0.73 %

0.72 %

0.67 %

Non-performing assets to total assets

0.64 %

0.55 %

0.57 %

0.56 %

0.52 %

ACL - loans(1) to total loans

1.56 %

1.56 %

1.39 %

1.37 %

1.38 %

ACL - loans(1) to non-performing loans

186 %

218 %

191 %

191 %

208 %

Profitability

Return on average assets

0.79 %

1.24 %

0.91 %

0.93 %

1.04 %

Operating return on average assets(2)

1.17 %

1.11 %

1.00 %

1.03 %

1.08 %

Return on average common shareholders' equity

8.13 %

13.47 %

9.28 %

10.09 %

11.25 %

Operating return on average common shareholders' equity (tangible)(2)

15.65 %

15.56 %

13.08 %

14.68 %

15.17 %

Net interest margin

3.49 %

3.43 %

3.32 %

3.36 %

3.40 %

Efficiency ratio(2)

59.6 %

62.6 %

63.2 %

62.0 %

61.5 %

Non-interest expense to total average assets

2.82 %

2.61 %

2.60 %

2.61 %

2.48 %

Operating non-interest expense to total average assets(2)

2.45 %

2.55 %

2.49 %

2.47 %

2.47 %

Capital Ratios(3)

Tangible common equity ratio ("TCE")(2)

7.5 %

7.3 %

7.4 %

7.4 %

6.8 %

Tier 1 leverage ratio

8.9 %

9.2 %

9.3 %

9.5 %

9.4 %

Common equity Tier 1 capital ratio

10.5 %

10.3 %

10.3 %

10.3 %

10.3 %

Tier 1 risk-based capital ratio

11.3 %

11.1 %

11.1 %

11.2 %

11.1 %

Total risk-based capital ratio

14.0 %

13.8 %

14.0 %

14.0 %

14.0 %

(1) "ACL - loans" relates to the allowance for credit losses ("ACL") specifically on "Net Loans" and does not include the ACL related to off-balance-sheet

    ("OBS") credit exposures.

(2) Non-GAAP financial measure. Refer to the calculation on the page titled "Reconciliation of Non-GAAP Measures" at the end of this press release.

(3) Regulatory capital ratios as of September 30, 2024 are preliminary estimates and prior periods are actual.

 

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED ENDING BALANCE SHEETS (UNAUDITED)

(dollars in thousands)

Sep 30

Jun 30

Mar 31

Dec  31

Sep 30

2024

2024

2024

2023

2023

ASSETS

Cash and due from banks

$     296,500

$     333,238

$     247,581

$     300,343

$     304,042

Other interest-earning assets

1,287,392

1,188,341

231,389

373,772

222,781

Loans held for sale

17,678

26,822

10,624

15,158

20,368

Investment securities

4,545,278

4,184,027

3,783,392

3,666,274

3,698,601

Net loans

24,176,075

24,106,297

21,444,483

21,351,094

21,177,508

Less: ACL - loans(1)

(375,961)

(375,941)

(297,888)

(293,404)

(292,739)

   Loans, net

23,800,114

23,730,356

21,146,595

21,057,690

20,884,769

Net premises and equipment

171,731

180,642

213,541

222,881

215,626

Accrued interest receivable

115,903

120,752

107,089

107,972

101,624

Goodwill and intangible assets

641,739

648,026

560,114

560,687

561,284

Other assets

1,309,391

1,357,609

1,342,632

1,267,138

1,366,082

    Total Assets

$ 32,185,726

$ 31,769,813

$ 27,642,957

$ 27,571,915

$ 27,375,177

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits

$ 26,152,144

$ 25,559,654

$ 21,741,950

$ 21,537,623

$ 21,421,589

Borrowings

2,052,227

2,178,597

2,296,040

2,487,526

2,370,112

Other liabilities

777,412

929,953

847,288

786,627

1,016,783

    Total Liabilities

28,981,783

28,668,204

24,885,278

24,811,776

24,808,484

Shareholders' equity

3,203,943

3,101,609

2,757,679

2,760,139

2,566,693

    Total Liabilities and Shareholders' Equity

$ 32,185,726

$ 31,769,813

$ 27,642,957

$ 27,571,915

$ 27,375,177

LOANS, DEPOSITS AND BORROWINGS DETAIL:

Loans, by type:

Real estate - commercial mortgage

$  9,493,479

$  9,289,770

$  8,252,117

$  8,127,728

$  8,106,300

Commercial and industrial

4,914,734

4,967,796

4,467,589

4,545,552

4,577,334

Real estate - residential mortgage

6,302,624

6,248,856

5,395,720

5,325,923

5,279,681

Real estate - home equity

1,144,402

1,120,878

1,040,335

1,047,184

1,045,438

Real estate - construction

1,332,954

1,463,799

1,249,199

1,239,075

1,078,263

Consumer

651,717

692,086

698,421

729,318

743,976

Leases and other loans(2)

336,165

323,112

341,102

336,314

346,516

Total Net Loans

$ 24,176,075

$ 24,106,297

$ 21,444,483

$ 21,351,094

$ 21,177,508

Deposits, by type:

Noninterest-bearing demand

$  5,501,699

$  5,609,383

$  5,086,514

$  5,314,094

$  5,575,374

Interest-bearing demand

7,779,472

7,478,077

5,521,017

5,722,695

5,757,487

Savings

7,740,595

7,563,495

6,846,038

6,616,901

6,707,729

     Total demand and savings

21,021,766

20,650,955

17,453,569

17,653,690

18,040,590

Brokered

843,473

995,975

1,152,427

1,144,692

941,059

Time

4,286,905

3,912,724

3,135,954

2,739,241

2,439,940

Total Deposits

$ 26,152,144

$ 25,559,654

$ 21,741,950

$ 21,537,623

$ 21,421,589

Borrowings, by type:

Federal funds purchased

$             ,

$             ,

$             ,

$     240,000

$     544,000

Federal Home Loan Bank advances

950,000

750,000

900,000

1,100,000

730,000

Senior debt and subordinated debt

535,917

535,741

535,566

535,384

540,174

Other borrowings

566,310

892,856

860,474

612,142

555,938

Total Borrowings

$  2,052,227

$  2,178,597

$  2,296,040

$  2,487,526

$  2,370,112

(1) "ACL - loans" relates to the ACL specifically on "Net Loans" and does not include the ACL related to OBS credit exposures.

(2) Includes equipment lease financing, overdraft and net origination fees and costs.

 

FULTON FINANCIAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(dollars in thousands, except per share and share data)

Three months ended

Nine months ended

Sep 30

Jun 30

Mar 31

Dec  31

Sep 30

Sep 30

2024

2024

2024

2023

2023

2024

2023

Net Interest Income:

Interest income

$ 427,656

$ 400,506

$ 339,666

$ 338,134

$ 330,371

$  1,167,828

$ 935,103

Interest expense

169,647

158,786

132,729

126,128

116,529

461,162

292,822

    Net Interest Income

258,009

241,720

206,937

212,006

213,842

706,666

642,281

Provision for credit losses

11,929

32,056

10,925

9,808

9,937

54,910

44,228

    Net Interest Income after Provision

246,080

209,664

196,012

202,198

203,905

651,756

598,053

Non-Interest Income:

Wealth management

21,596

20,990

20,155

19,388

19,413

62,741

56,152

Commercial banking:

   Merchant and card

7,496

7,798

6,808

7,045

7,626

22,103

22,160

   Cash management

7,201

6,966

6,305

6,030

5,960

20,473

17,310

   Capital markets

3,311

2,585

2,341

4,258

2,960

8,236

11,396

   Other commercial banking

4,281

4,061

3,375

3,447

3,176

11,716

9,514

Total commercial banking

22,289

21,410

18,829

20,780

19,722

62,528

60,380

Consumer banking:

  Card

7,917

8,305

6,628

6,739

6,770

22,850

19,604

  Overdraft

3,957

3,377

2,786

2,991

2,996

10,120

8,425

  Other consumer banking

3,054

2,918

2,254

2,357

2,407

8,226

7,081

Total consumer banking

14,928

14,600

11,668

12,087

12,173

41,196

35,110

Mortgage banking

3,142

3,951

3,090

2,288

3,190

10,183

8,100

Gain on acquisition, net of tax

(7,706)

47,392

—

—

—

39,685

—

Other

5,425

4,933

3,398

5,587

1,463

13,756

8,539

Non-interest income before investment securities gains (losses)

59,674

113,276

57,140

60,130

55,961

230,089

168,281

Investment securities gains (losses), net

(1)

(20,282)

—

(752)

—

(20,283)

19

    Total Non-Interest Income

59,673

92,994

57,140

59,378

55,961

209,806

168,300

Non-Interest Expense:

Salaries and employee benefits

118,824

110,630

95,481

97,275

96,757

324,935

280,142

Data processing and software

20,314

20,357

17,661

16,985

16,914

58,332

49,486

Net occupancy

18,999

17,793

16,149

14,647